With responsibility for about $3 billion of revenue or 40% of Infosys' sales, BG Srinivas, who heads Europe and financial services, has his task cut out if the company has to catch up with rivals posting better growth. Deferment of projects, a large project cancellation in Europe, and a ramp down in UK caused Infosys to scale down its year end guidance last week. Srinivas talks to Harsimran Julka about the challenges in Europe and when he expects to see the situation improve. Excerpts:

Why is there a divergence between Infosys' outlook and that of TCS'? TCS' commentary is lot more optimisitic...

I can't comment on the outlook projected by other IT firms but can surely say that the industry is seeing a tough time. If other companies are seeing a better pipeline in financial services, it may be client specific. It is the weak demand environment and macroeconomic challenges our clients are facing, which we reflected in the outlook for business. (Infosys cut its sales outlook for FY13 from 8% to 5%)

We saw a program reversal from a large European client as well some ramp down from a UK utilities player. In Europe, most of the large system integrators and tier I players are facing macro challenges. The overall pie has shrunk.

But the pain in financial services industry is not widespread. For instance, the hi-tech sector in the US is doing fairly well. Manufacturing and retail are also steady, which is a good sign.

What kind of pressure do you face, considering the regions and verticals that you handle for Infosys are facing most challenges?

It's a big responsibility. But on the other side, it offers a lot of excitement for me and my team, to navigate through these challenging times. Our Europe business is better geared towards aligning itself to the Infosys 3.0 vision, of making the entire business align towards consulting, products and platform across areas such as cloud and mobility.

Are you facing a pricing pressure in Europe? Is Infosys losing in Europe to Indian rivals like HCLT, which has a low margin strategy?

Competitive bidding does take place in Europe. But it is not as acute as in other parts of the world, certainly not like in the US.

We are seeing less pricing pressure in Europe, as we sell more value added services. Clients rarely demand price discounts in Europe. As it is, we provide them large savings with our global delivery model and nearshore centres.

We are ramping up our European centers in locations such as Czech Republic, which will add to our capabilities. Nordics is a region which is relatively untouched by the turmoil, and we will go after that.

What is delaying decisions for Infosys clients in Europe?

The threat of implosion of the Euro remains. And as long as that threat persists, clients will remain cautious in decision making and rampups. IT spending has been a bit slower due to that.

Discretionary spends have come down. If the Euro zone implodes, no company or country can be insulated. That's why we are seeing most clients in Europe rush to conserve cash.

Despite that, we don't see any major incident. Clients continue to maintain steady relationships with us.

Revenues from Europe were down 8% sequentially because of financial pressures some clients are facing there.

Can investors expect better results from Infosys in Europe this year?

The good part is that there is a political will in all of Europe to restore economic confidence. In Greece, we have seen the new government has shown confidence to take some strong measures. Restoring confidence amongst people will bring back positivity in business sentiment and will increase offshoring. UK is technically in a recession, but the government is taking some measures to restore confidence. Overall business sentiment in France and Germany is stable.

I believe that any kind of increase in offshoring will come once the elections in US are over. Meanwhile we will ramp up our existing headcount of 7,000 people in US, to cater to finance and insurance clients there.